The external auditor’s role in regulation – An insight into the advisory activity of the National Audit Office of the United Kingdom

Abstract

There has been considerable growth in recent years of government regulations over a whole range of activities and businesses. Regulation is a product of the way in which society perceives and responds to risk. In devising regulations, there must be a proper consideration of where the risks lie and how to balance the need for protection against the need to foster a society where people accept and share responsibility for managing life's risks. Good, effective regulation requires proper risk analysis, a thorough assessment of cost versus benefits and an independent approach – all skills that can be well deployed by the external auditor. In the UK, the National Audit Office has been working with the Better Regulation Commission to reduce regulatory burdens without endangering regulatory outcomes. The Better Regulation Commission (www.brc.gov.uk) is an independent body which is responsible for advising and challenging the Government on regulatory reform, and scrutinising the Government's plans for regulatory simplification. Its focus on reducing burdens has the benefit of releasing resources for higher value activities, increasing voluntary compliance and improving legitimacy. This paper concludes that regulatory reform is an important issue for Supreme Audit Institutions.